30/06/2011 - 00:00

Resources players need to pull their weight

30/06/2011 - 00:00


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WESTERN Australia needs more people, and needs a vision to support its long-term growth and economic diversification.

WESTERN Australia needs more people, and needs a vision to support its long-term growth and economic diversification.

These were two closely related themes that emerged from WA Business News’ boardroom forum on the cost of doing business.

Specific proposals included a larger commitment to training, and more flexible rules around skilled migration.

Progress on these measures would help to address the underlying issue, the forum heard.

“The real issue is WA having a small pool of talent,” BDO corporate finance partner Sherif Andrawes said.

“For us and many of our clients it’s an issue finding staff, and then there is the premium you pay for those staff.”

Mr Andrawes shared the concern of many business owners, who have to deal with staff getting lured away by mining companies.

Karara Mining chief executive Steve Murdoch agreed that the WA labour market had unique issues.

“In the west we tend to be a bit isolated and a closed market,” Mr Murdoch said.

While mining companies are often painted as the villains, Mr Murdoch said Karara also had issues.

“I really struggle with the lack of loyalty no matter what you pay,” he said. “There is no alignment with the brand. I think it’s a reflection not only of the activity in the market but the isolation.”

Mr Murdoch was also concerned that the traditional link between wage increases and productivity increases was breaking down.

“The iron ore industry is on a slippery slope if we don’t arrest that pretty quickly,” he said.

ABN Group managing director Dale Alcock repeated the construction industry’s long-held concern about funding of training.

In particular, construction companies are required to pay a levy into an industry-training scheme but resource companies are not subject to a similar levy.

“If you look at construction, we are breeding guys to go and work in the mining industry,” Mr Alcock said.

His ABN Group takes on 80 apprentices a year, and currently has 230 apprentices.

“We retain only 55 per cent and the rest go straight into mining, so I ask how much longer do I want to do that for?” Mr Alcock asked.

Mr Alcock acknowledged the resource companies do a good job training mine workers, but they need to do more because they are large employers of construction workers when they develop new projects.

“It’s just bloody ridiculous,” he said. “The resources sector has to get real, so start contributing.”

Mr Alcock also expressed concern about recent federal government moves to crack down on independent contractors, specifically measures to increase reporting requirements in order to improve tax compliance.

“It’s effectively going to be a real attack on the bona fide independent contracting that is absolutely key to what we do in our industry,” he said.

“It will be like the Fighting Fund, it’s got to be pushed back; the community has got a stake in that.

“If that goes ahead, then kiss sub-contractors in housing goodbye.

“They will all be day labour, and then see what you pay for housing.”

Participants in the boardroom forum agreed that WA needed to attract more workers to the state.

Mr Alcock said the rules around skilled migration should be changed.

“As a large contractor, we cannot act as a sponsoring employer,” he said.

“We should be able to say, we are the head contractor, we need these trades, we will engage them on our projects over this period, and we will take care of them.

“They might move through several contracting teams but effectively we will guarantee them work over that period.”

Mr Andrawes said offshore recruitment was currently an effective option for the accounting profession.

“We’re finding that the best place to get staff is from overseas, from the UK and Ireland,” he said.

However, he said this was helped by the depressed economic conditions in much of Europe, and WA should not rely on this lasting.

“We have to make WA a great place to live, by investing in infrastructure,” Mr Andrawes told the forum.

“That will make the pool bigger, by attracting more people to the state.”

The Brand Agency’s managing director Steve Harris said it was difficult for WA to invest in infrastructure when the state got such a raw deal on the distribution of GST revenue.

He cited state Treasury calculations that WA would miss out on about $12 billion of GST payments over the next four years if the Commonwealth continued to apply the current policy.

“We are overpaying, and when you go to Sydney and stand on a new train line in three years and when you go to Melbourne and sit in the new rugby stadium, put a smile on your face because you paid for it, Western Australia,” Mr Harris said.

JBWere state manager Jason Farrow widened the debate, saying WA has to think about diversifying its economy.

“We are a centre of excellence in resources and mining and the prosperity here is a function of that, but we need to think seriously about what comes after that,” Mr Farrow said.

He contrasted WA and California, which had both enjoyed gold mining and energy booms.

“They have now got a broad, deep economy and they are the IT centre of the world,” Mr Farrow said.

“What happens in WA after this boom, which is likely to last for quite some time yet?

“We need to ensure that our educational institutions are second to none, that we become a centre of excellence, we have to make sure that we invest in the arts, and make sure that we can actually house people, that we have transport infrastructure and high-density housing, and when you get out of the train in the CBD at 5pm, it’s not tumbleweeds.”


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